School district: Riverhead Town owes us $4.5 million in late tax payments

Riverhead Town is late in turning over school tax payments to the Riverhead Board of Education, school officials said Tuesday.

According to Deputy Superintendent Sam Schneider, the town’s delinquent payments have created cash-flow issues. School board member Chris Dorr expressed disappointment during Tuesday’s virtual meeting that the town has outstanding payments owed to the district.

Mr. Schneider estimates that Riverhead town owes $4.5 million, while Brookhaven and Southampton towns have both paid their share of taxes in full for the 2019-2020 school year. 

“Unfortunately Riverhead is the only town in Suffolk that is consistently late in paying its obligation to the school district,” Mr. Schneider said, adding that last year, the district did not receive payment in full until mid September, in turn putting “great strain” on the district’s cash flow.

In an interview Wednesday, Mr. Schneider said monies owed by the town result in delayed payments made by the district to other districts, including the Riverhead Free Library. “We are contractually obligated to pay Riverhead Free Library at four points during the year,” he said.

According to a resolution approved by the Board of Education Tuesday, the first $953,139.25 payment is due Oct. 1.

Without the tax payments in place, Mr. Schneider said the district is forced to borrow money through Tax Anticipation Notes (TAN) to cover the period between when bills are due and when the tax money is received. “We are not designed to pay out a TAN while waiting for taxes to be remitted from prior fiscal year,” he said.

Riverhead Town Supervisor Yvette Aguiar said Wednesday that she’s aware of the situation.

“We collected those taxes, but we’re $8.3 million short,” in resident payments, Ms. Aguiar said. “Usually it’s about $3 million but because of [COVID-19], it’s more than doubled.”

Part of the delay, she said, stems from a May executive order signed by Gov. Andrew Cuomo that granted tax extensions to municipalities across the state in the wake of the coronavirus pandemic. Instead of the usual May 31 deadline, Suffolk County property owners had until June 21 to pay their tax bills.

Now, she said, “We’re at the mercy of the county.” She said that as soon as the county makes the town whole, they’ll pay the amount owed to the school district.

Because of the pandemic, she said, she’s anticipating those payments may not come until September or October.

Ms. Aguiar also argued that neighboring towns pay a lower share of taxes flowing into the school district. “Ours is very high, which is why Southampton and Brookhaven were able to pay it out.”

Citing a consistent pattern of late remittance, Board president Laurie Downs asked for legal guidance from district counsel Christopher Venator. 

“This is not the first time,” Ms. Downs said, “Which makes me wonder, are they collecting interest on our money and holding it back?” 

Mr. Venator said that if the board is willing to, they could adopt a resolution to file a notice of claim and commence legal action against the town.

Mr. Schneider said he’s emailed members of the Town Board requesting payment be made by the end of the district’s fiscal year, which is June 30, but has not heard back.

He also said the district does receive interest payments from the town, but he has no independent way of verifying how those payments are determined. The larger issue, he said, is that other districts do not have the same problems.

“We’re not asking for anything that other towns do not provide to districts within their boundaries,” he said, noting that other towns struggle with late payments from residents “There are 10 townships in Suffolk County and nine of those 10 towns pay by June 30.”